Nobody home

Ancleto Alfaro migrated from Mexico to the United States 10 years ago, leaving his wife and children behind. He found work and set out to earn enough to bring his family here and provide a home for them.

In 1999, Alfaro took a fancy to a vacant, tax-delinquent home on Springwells Street in southwest Detroit. He also had the good fortune of befriending Anita Estrada, a woman who lived near the home he coveted. Estrada was familiar with the City of Detroit’s Nuisance Abatement Program (NAP), which is designed to help people fix up, maintain and eventually acquire the titles to tax-delinquent abandoned properties.

Estrada, 60, offered to help Alfaro, who speaks only Spanish, navigate the contract process.

The city awarded Alfaro a NAP contract a few months later, and Alfaro moved into the structure three years ago. He says he spent $37,000 rehabilitating the house.

“He worked on it,” says Estrada. “The city came and inspected it, and said everything was done.”

Early last year, city inspectors determined that Alfaro had honored his contract. The city said he was entitled to get the deed to the home. But he didn’t.

Estrada had noticed a man who would come take photos of the house while Alfaro was still repairing it. The man turned out to have an interest in a West Bloomfield corporation that owned the home Alfaro was rehabilitating.

The corporation paid the city taxes owed, then sent Alfaro an eviction notice. The owner took Alfaro to 36th District Court, and a judge told Alfaro he had to move.

“I feel bad,” says Alfaro through an interpreter during a phone call from California, where he’d gone to work on his family’s immigration status. “They were going to demolish the house, and I fixed it up myself.”

Fortunately, the NAP ordinance enacted by the City Council in 1983 contains language that requires homeowners who come forward and pay back taxes on NAP properties to repay participants for work they’ve done. Ted Phillips, an attorney with the nonprofit United Community Housing Coalition (UCHC), which helps low-income families, is representing Alfaro in his attempt to recoup his investment.

“What’s baffling is, the city and its Law Department should be going to bat for my client,” Phillips says. “If the city had moved to take the back taxes that were owed in the beginning, the guy [owner] would have had no reason to challenge.”

Unfortunately, Alfaro’s NAP nightmare is not unique.

Councilwoman Sheila Cockrel says people should understand that there are no guarantees they will get the home they contract for.

“The problem is,” she says, “until somebody gets a title, your sweat equity isn’t enough. If you do fix it, then you run the risk of it being taken back by the owner, because you haven’t acquired title.”

NAP and its cousin, the city’s Repair-to-Own program (RTO, involving homes that the city has foreclosed but can’t get anyone to buy), have had a less-than-stellar return on taxpayer investment.

NAP has been in existence since 1983, and RTO since 1989. Reports reviewed by Metro Times indicate the city has managed to rehab and turn over title to fewer than 500 homes. This in a city with an estimated 110,000 tax-delinquent properties; a city that owns some 40,000 parcels itself.

A report prepared by the Planning Commission in 2000 revealed that just 291 out of 1,635 NAP contracts signed between 1988 and December 1999 were completed, or about 18 percent.

Only about one-half of one percent of total applicants ever got a house, the report states.

How much did the city spend on the program during the years examined? Nearly $9 million — about half of it on grants to rehabilitate houses, and the other half on city staff and administrative costs.

Taxpayers shelled out $15,934 per home in administrative costs alone, according to the report.

More recent city reports indicate that Detroit has continued to pour money into NAP — $645,556 in fiscal 2001-02, declining to $454,244 in the current 2003-04 fiscal year. Yet no more than 51 homes have been turned over to NAP participants in any year since 2000.

There are currently six full-time city workers assigned to NAP and RTO.

“The program hasn’t worked,” says Kwame Kilpatrick, the first Detroit mayor who has even been supportive of the concept of NAP and RTO. “We’re trying to see if we can make it work, because you have so many people who have been disenfranchised by it, people who cared for a home, who had their beliefs and hopes up that they would have a home, and it was snatched from under them.”

It may be serendipity that the state Legislature last week approved Public Act 246, which will allow Wayne County to begin handling tax collections for the City of Detroit, as it does for every other municipality in the county.

Detroit had long balked at allowing the county, which is eminently more efficient than the city in foreclosing on and reselling tax-delinquent properties, to do tax collections on the city’s behalf.

Negotiations on the legislation picked up considerable steam after a Metro Times investigation (“Dearth & Taxes,” Aug. 20-27, 2003) revealed that the city was collecting only 87 percent of property taxes (one of the lowest rates in the nation) and losing $60 million in uncollected taxes each year.

With Wayne County collecting all property taxes in the city and then giving the city its share, NAP and RTO may be rendered even more irrelevant. That’s because Wayne County forecloses and then auctions delinquent properties after two years. The city, by some estimates, takes as long as seven years, and with the county handling most foreclosures, there may not be many new acquisitions to go into the city’s RTO program.

It should be noted that abandoned properties deteriorate further during the long wait for city action.

On March 1, Detroit will begin turning over all records of delinquent taxpayers to the county. Wayne County Treasurer Raymond Wojtowicz tells Metro Times he plans to start collecting city tax debts from as recently as 2003.

The new system promises to further compound the challenges to NAP, since its success depends highly on the speed with which the city can collect back taxes or foreclose delinquent properties.

According to state Rep. Steve Tobocman, D-Detroit, even after the Delinquent Property Tax Foreclosure Act of 1999 (which subjected negligent properties to forfeiture, foreclosure and sale within three years), Detroit still took an average of five to seven years to go after delinquencies.

Legislators created the Foreclosure Act with Detroit in mind.

The city’s inertia means that NAP participants sometimes think they are getting homes, only to see them snatched away, not just by returning owners, but when Wayne County forecloses on properties for which it’s also owed taxes.

Vena Johnson learned the hard way just how swiftly Wayne County can act. And how oblivious the city can be.

Johnson wanted to rehabilitate an abandoned, tax-delinquent home on Karl Street. The city told her she could do it and gave her a NAP contract.

Neither city nor county taxes had been paid on the home in more than two years. But Detroit didn’t tell Wayne County about its agreement with Johnson, and her dream house was snapped up at a county auction.

“I’m angry,” says Johnson, 43, who applied for her contract in February 2003.

Johnson liked her chances of securing the Karl Street home. She monitored the property while waiting for notification of the first of two hearings all applicants must attend before securing a NAP contract.

“I went over one day when I knew the inspector was coming out,” she says. “A guy walks up, pulls out his papers, and asks what I am doing on his property. I said, ‘Who are you?’ He said, ‘I’m the owner.’”

The man had just come from the Wayne County treasurer’s auction, where he had purchased the deed to the house. Johnson says he even showed her a copy of his $20,000 cashier’s check.

She went home and checked Wayne County’s Web site; the house on Karl was, indeed, listed.

Johnson tried to plead her case with Barbara Douglas, who supervises NAP for the City of Detroit.

Harry Overman is having similar problems with a home he is renovating. Overman has had a NAP contract to rehab a house on Iris, on Detroit’s west side, since November.

Shortly after he signed his contract, he went to check on the house. A neighbor gave him a letter that had been found blowing on the lawn. The letter was a notice from Wayne County warning him to pay the back county taxes to avoid foreclosure.

Overman reported his case to the Association of Community Organizations for Reform Now (ACORN), a national housing organization. Detroit ACORN head Richard Winslow says he contacted Douglas, who told him she intended to send a city housing inspector to the county to rectify the error.

A week later, NAP officials confirmed that the county still had not been told of Overman’s NAP contract.

It is, in fact, Detroit’s responsibility to let the county know which houses have NAP contracts. The county then agrees not to foreclose on NAP houses.

The Nuisance Abatement and Repair-to-Own programs were supposed to be blight busters. City Council passed the NAP ordinance, the first of the two, in 1983, figuring that citizens could contract with the city to renovate and live in tax-delinquent homes that were privately owned.

The program, however, would not be operational for five years.

Mayor Coleman Young refused to implement it. He fought the nuisance-abatement model in court, saying it invited squatters and made the city responsible for property it did not own. After Young lost two appeals, NAP was implemented in 1988.

Repair-to-Own, which is nuisance abatement for city-owned properties, was created in 1989. Both programs require participants to live in the homes while the repairs are done. Nuisance abatement requires a three-year occupation. Repair-to-Own requires one. At the end of the appointed time, the participants can purchase the deed for $1.

Councilwoman Sheila Cockrel contends that troubles with NAP and RTO are not all the city’s fault. She says many citizens who obtain NAP contracts fail to honor their agreements because they can’t afford to make the repairs mandated by city inspectors.

“What people have done,” she says, “is get the [contract to the] property, see what needs to be done, and abandon it again.”

But are NAP and RTO even necessary, in light of PA 246?

Employees at Building and Safety Engineering, the department that administers the program, admit the challenges presented by the new law.

“Does Wayne County’s new tax collection process confuse the nuisance abatement process?” housing inspector Robert Bass asks. “It certainly speeds up the collection process so we have less time to fix the tax collection problem.”

Repair-to-Own could conceivably be more effective than nuisance abatement, given that the homes in the program are already owned by the city. The problem is there are too few homes offered on the program’s list to make any real difference.

A new Repair-to-Own list is supposed to be generated every three months, and should feature 20 houses. The last list was released in June, and it contained 17 houses.

“I asked Planning and Development to provide me a complete list of city-owned property,” says Councilwoman JoAnn Watson. “I don’t have the list yet. So I know the citizens get disrespected because the City Council doesn’t get respected. The city owns thousands and thousands of properties, while there are citizens who have no homes. It would be the best of both worlds to move them into these homes.

“The same way the city is on a fast track with these hotels, nuisance abatement should be on a fast track,” says Watson. “There should not be a disconnect between the citizens and the city.”

Houses that are eligible for Repair-to-Own are forwarded from the city’s Real Estate Division. They then go through the Planning and Development Department, which ultimately sends them to Building and Safety Engineering.

Metro Times reported last summer (“Hot Potato,” June 18-24, 2003) that fewer than 20 RTO homes have made it into the hands of citizens since 1998.

ACORN’s Winslow says that by the time the list gets “to the people” it doesn’t offer enough viable properties to do anyone any good. Citing a list of vacant homes that the city advertised for sale in the Detroit News/Detroit Free Press weekend edition in early December, Winslow suggests that Planning and Development prefers to profit from the houses that are in the best condition.

Repair-to-Own, Winslow argues, gets the leftovers — the unsaleable.

Planning and Development Department executives were on holiday vacations when Metro Times called to ask whether the homes in the best condition are kept off RTO lists.

In fact, few people seem to know for sure which department is primarily responsible for Repair-to-Own. Sylvia Crawford, spokeswoman for Planning and Development, had not heard of the program in June, and suggested that it might be the responsibility of Building and Safety Engineering.

Crawford now knows about it, but still is unsure who is responsible for it. Both Douglas and Amru Meah, Building and Safety Engineering director, say it is PDD’s program, but Building and Safety Engineering gets the funds to administer it.

Kathleen Royal, executive manager of the Real Estate Division, says she is under the impression that it is Building and Safety Engineering’s program, and that she has suggested sitting down with Meah and Walter Watkins, head of Planning and Development, to “hash it out.”

Royal attributes the lean times with RTO on changing times. The homes in the city’s inventory that go on the Repair-to-Own lists have to be unoccupied structures where ownership has reverted back to the city because of unpaid taxes. She says that fewer houses meet these criteria today than in the late 1980s and early 1990s. During the 1980s, she says, federal rehabilitation programs created a groundswell of people who occupied many of the city’s low-income and vacant residences.

According to Royal, there are simply fewer homes available now.

Real Estate Division manager Letitia Burks says her department tries to send an RTO list whenever Building and Safety Engineering requests it. Because there are fewer homes, however, they sit in the inventory longer.

This also means the homes spend more time decaying. By the time they get to Building and Safety, they are often not worth the risk.

“Though there are not as many [RTO homes], they shouldn’t stop the program,” Burks says.

She suggests that the rate at which her department receives houses depends on the rate at which the city forecloses on the properties.

But now that Wayne County will take over foreclosures, it would seem that the flow of properties that revert to the city might slow to a trickle, or even stop altogether. That would seem to suggest a brief future for the RTO program.

Winslow says NAP has sped up its progress since the current administration expressed support for it. He says inspectors come out in a more timely fashion, and computer records of homes seem to be checked faster.

Each house in the program goes through three inspections, each followed by a report, before a contract is awarded. Housing inspector Harry Hummer explains that the three inspections take a total of two hours and twenty minutes to complete.

Meah says staff — six full-time employees — and budget are issues.

“With a half a million dollars allocated for the program to cover staffing [the actual 2003-2004 allocation is $454,244],” he says, “that puts a huge amount of strain on our resources.”

Winslow disagrees. He thinks Building and Safety Engineering doesn’t do enough with the staff it has.

“I believe they do have enough staff,” he says. “And if they don’t, why don’t they ever bring that up in the City Council budget hearings?”

If misery loves company, Detroit should know that other cities have felt our pain. According to Tobocman, programs created out of the Homestead Act of 1979, which earmarked funding to cities with blight problems, are well-intentioned, but many have not achieved success easily.

Washington, D.C.’s Homestead Program, which has similarities to NAP and RTO, has adopted an alternative approach.

“The Homestead Program was taking too long,” says Paul Savage, deputy director of Washington, D.C.’s Housing and Community Development department. “The city would obtain properties and have a lottery. Citizens would bid, be trained and given a set time frame for rehabilitation. They had to live in them for five years.”

Savage says the time requirement proved to be too long to make an impact on the city’s blight problem. City grants were available, but they failed to help because so many of the homes needed more than what the funding could provide.

A new program, Home Again, was created for the D.C. area. It is quickly becoming the preferred program.

Homes are “bundled” under the Home Again program, then sold for redevelopment to companies, individuals and non-profit organizations. The city has found this program to be more expedient.

Tobocman suggests that partnering with organizations like nonprofits and other faith-based groups — Habitat for Humanity, Greater Corktown and the Grandmont-Rosedale group are examples — Detroit could devise an alternative to the lack of efficiency.

Meah says his department is reaching out to companies and groups such as Home Depot and the Church of God In Christ, both of which have expressed interest in assisting with the program.

None of these groups have offered detailed plans.

Crawford acknowledges that the city is wary of lawsuits from people who get, then lose, NAP contracts.

“Citizens are gonna be mad because the city allowed them to invest,” she says.

Tobocman, who remains an advocate of programs like NAP and RTO, sees a world where the new foreclosure system can co-exist with revamped programs.

“Under the new system the county is more aggressively going after back taxes than the city,” Tobocman says. “The county is not thwarting the city’s program, but beating it to the punch. It shows the weakness of the Nuisance Abatement Program.

“I’m not saying nuisance abatement doesn’t deserve city resources. It does. I’m saying we should combine those programs (nuisance abatement and the county foreclosure system) to make it more effective, so that we acquire those properties and get them into the hands of people who will get them up to code.”